UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the period ended December 31, 1995
Commission File Number: 0-12104
IMMUNOMEDICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 61-1009366
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
300 American Road, Morris Plains, New Jersey 07950
(Address of principal executive offices) (Zip code)
(201) 605-8200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of February 7, 1996, there were 33,325,310 shares of the registrant's
common stock outstanding.
IMMUNOMEDICS, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, June 30,
1995 1995
____________________________________________________________________ ______________ ______________
ASSETS
Current Assets:
Cash and Cash Equivalents $ 2,034,078 7,162,837
Marketable Securities 24,436,301 15,651,369
Other Current Assets 1,137,088 687,674
______________ ______________
Total Current Assets 27,607,467 23,501,880
Property and Equipment, net of accumulated
depreciation of $4,896,000 and $4,427,000 at
December 31, 1995 and June 30, 1995, respectively 5,054,241 4,722,604
______________ ______________
$ 32,661,708 28,224,484
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 2,096,076 1,932,908
Other Current Liabilities 3,007,025 2,662,401
______________ ______________
Total Current Liabilities 5,103,101 4,595,309
Commitments and Contingencies
Stockholders' Equity:
Preferred stock; $.01 par value, authorized 10,000,000 shares;
Series B convertible, authorized 200,000 shares;
issued and outstanding 124,527 shares at June 30, 1995 0 1,245
Series C convertible, authorized 200,000 shares;
issued and outstanding 200,000 shares at December 31, 1995 2,000 0
Common stock; $.01 par value, authorized 50,000,000 shares;
issued and outstanding 32,776,919 and 30,624,585 shares
at December 31, 1995 and June 30, 1995, respectively 327,769 306,246
Capital contributed in excess of par 82,430,930 72,098,771
Accumulated deficit (55,258,828) (48,781,384)
Accumulated net unrealized gain on securities 56,736 4,297
______________ ______________
Total Stockholders' Equity 27,558,607 23,629,175
______________ ______________
$ 32,661,708 28,224,484
<FN>
See accompanying notes to unaudited condensed consolidated financial statements.
IMMUNOMEDICS, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
________________________________ ____________ ____________ ____________ ____________
REVENUES:
Product sales and royalties $ 47,130 27,237 98,972 69,761
Research and development 22,500 549,924 90,000 1,143,500
Interest 417,315 251,814 741,699 479,506
____________ ____________ ____________ ____________
486,945 828,975 930,671 1,692,767
COSTS AND EXPENSES:
Cost of goods sold 4,884 1,615 11,884 18,476
Research and development 3,045,006 2,950,211 6,107,960 6,114,633
General and administrative 606,168 546,454 1,288,271 1,175,584
____________ ____________ ____________ ____________
3,656,058 3,498,280 7,408,115 7,308,693
____________ ____________ ____________ ____________
Net loss $(3,169,113) (2,669,305) (6,477,444) (5,615,926)
____________ ____________ ____________ ____________
Net loss per share $ (0.10) (0.09) (0.20) (0.19)
Weighted average number of ____________ ____________ ____________ ____________
shares outstanding 32,767,833 30,055,469 32,099,576 30,055,469
<FN>
See accompanying notes to unaudited condensed consolidated financial statements.
IMMUNOMEDICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
DECEMBER 31,
1995 1994
___________________________________________________________ _____________ ___________
Net cash used in operating activities ($ 5,912,190) (5,920,800)
Cash flows provided by/(used in) investing activities:
Purchase of marketable securities (15,435,391) (4,527,098)
Proceeds from maturities of marketable securities 6,664,382 4,867,823
Proceeds from sales of marketable securities 0 250,000
Additions to property and equipment (799,997) (50,228)
_____________ ___________
Net cash provided by/( used in) investing activities (9,571,006) 540,497
Cash flows provided by financing activities:
Issuance of convertible preferred stock, net 9,982,500 0
Exercise of stock options 371,937 0
_____________ ___________
Net cash provided by financing activities 10,354,437 0
Decrease in cash and cash equivalents (5,128,759) (5,380,303)
Cash and cash equivalents at beginning of period 7,162,837 6,371,245
_____________ ___________
Cash and cash equivalents at end of period $ 2,034,078 990,942
<FN>
See accompanying notes to unaudited condensed consolidated financial statements.
IMMUNOMEDICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements of Immunomedics, Inc. (the "Company"), which
incorporate the Company's wholly-owned subsidiary
Immunomedics, B.V., have been prepared in accordance with
generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, the statements do not include all of
the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. The balance sheet at June 30, 1995 has been
derived from the audited financial statements at that date.
Operating results for the six-month period ended December 31,
1995 are not necessarily indicative of the results that may be
expected for the fiscal year ending June 30, 1996.
For further information, refer to the annual financial statements and
footnotes thereto included in the Company's Form 10-K for the
year ended June 30, 1995.
(2) Cash Equivalents and Marketable Securities
The Company considers all highly liquid investments with
maturities of three months or less, at the time of purchase, to be
cash equivalents. Included in other current assets at December 31,
1995 and June 30, 1995 is accrued interest earned on cash
equivalents and marketable securities of $446,000 and $231,000,
respectively.
(3) Income Taxes
The Company has never made payments of Federal or state income
taxes and does not anticipate generating book income in fiscal
1996; therefore, no income taxes have been reflected for the
six-month period ended December 31, 1995.
(4) Net Loss Per Share
Net loss per share is based upon the weighted average number of
common shares outstanding. Common share equivalents,
consisting of outstanding stock options, are not included in the
computations since the effect would be antidilutive.
IMMUNOMEDICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) Stockholders' Equity
On September 29, 1995, the Company completed an equity
financing in accordance with Regulation S under the Securities Act
of 1933, pursuant to which a group of investors purchased 200,000
shares of non-dividend paying Series C Convertible Preferred
Stock for $10,000,000. The terms of the transaction allow the
investors, at their discretion, to convert the Preferred Stock into
shares of the Company's Common Stock during a pre-determined
period subject to extension. The conversion price is based on
pre-determined discounts of up to 9 3/4% from the average market price
per common share over a 30-day trading period surrounding the
dates conversion notices are received.
(6) License and Distribution Agreements
On August 2, 1995, the Company announced that its Development
and License Agreement with Pharmacia, Inc. ("Pharmacia" -
formerly Adria Laboratories Division of Erbamont, Inc.) was
terminated, as a result of which the Company regained the North
American marketing and selling rights for CEA-Scan. The
Company and Pharmacia were engaged in discussions on the
amount of payments to be made by Pharmacia to the Company to
satisfy Pharmacia's remaining obligations; however, these
discussions concluded without any agreement between the parties
on the amounts that were due to the Company. The Company is
now preparing to take what legal actions it believes are advisable to
collect the amounts it believes it is owed.
(7) Commitments and Contingencies
On February 1, 1994, the Company entered into a master lease
agreement, which was subsequently amended, pursuant to which
the Company may lease equipment for research, development and
manufacturing purposes having an aggregate acquisition cost of up
to $2,200,000. The basic lease payments under the master lease
agreement are determined based on current market rates of interest
at the inception of each equipment schedule take-down, and are
payable in monthly installments over a four-year period. The lease
agreement contains an early purchase option, at an amount which is
deemed to be fair value, exercisable no later than ninety days before
the thirty-sixth installment is due. Under the lease agreement,
continued compliance with certain financial ratios is required and,
in the event of default, the Company will be required to provide an
irrevocable letter of credit which is generally equal to the
outstanding balance of lease payments due at the time of default.
As of January 31, 1996, the Company has leased equipment with a
cost basis aggregating $1,630,000 under the master lease
agreement and recorded lease expense for the three and six months
ended December 31, 1995 of $96,000 and $191,000, respectively.
Part I - Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Overview
Since its inception, the Company has been engaged primarily in the research
and development of proprietary products relating to the detection, diagnosis
and treatment of cancer, and more recently infectious diseases. In April
1991, the Company filed a Product License Application ("PLA") with the Food
and Drug Administration ("FDA") seeking approval to manufacture and market, in
the United States, CEA-Scan, an in vivo colorectal cancer imaging product.
In May 1994, the Company received a letter from the FDA indicating that the
PLA filed for CEA-Scan for colorectal cancer imaging was not approvable
at that time. In July 1994, the Company met with FDA officials to review the
status of CEA-Scan and believed it had reached at that time an
understanding with the FDA that the results of the Phase III pivotal clinical
trial would be further analyzed, to ascertain potentially approvable claims
for the product and what additional steps would need to be taken to achieve
approvability. In March 1995, the Company submitted a response to the
FDA's questions, including an analysis suggesting that CEA-Scan will be
useful in the pre-surgical evaluation of recurrent colorectal cancer patients,
particularly in the assessment of tumor resectability for these patients. In
September 1995, the FDA scheduled the Company to present clinical data on
CEA-Scan to the Oncologic Drug Advisory Committee ("ODAC") on
October 17, 1995. At the same time, the FDA sent an action letter to the
Company requesting clarification of the data, additional information, and
additional analyses which the Company had provided in response to the
FDA's May 1994 letter. Accordingly, the status of the Company's PLA
remained not-yet approvable at the time of its notification of the ODAC
presentation. On October 17, 1995, the Company presented data to the
ODAC supporting the use of CEA-Scan to better define the spread of
colorectal cancer and to provide the surgeon with more complete diagnostic
information, thereby helping to avoid unnecessary surgery in patients who
could not benefit from the procedure. At the conclusion of the meeting, the
ODAC deferred a decision on the approvability of CEA-Scan,
recommended that the FDA and the Company resolve certain differences in
their respective approaches to the data, and further recommended that the
product may be more suitable for review by the Medical Imaging Drugs
Advisory Committee ("MIDAC") and select oncology consultants. In
January 1996, the Company announced that the FDA scheduled a MIDAC
review for February 16, 1996. In preparation for this meeting, the Company
believes it has now resolved all differences with the FDA concerning data
and imaging interpretation and is working toward its ultimate objective of
making a cohesive presentation to MIDAC.
In February 1992, the Company filed with the Health Protection Branch
("HPB") to market CEA-Scan in Canada. In March 1992, the Company
filed with the Committee for Proprietary Medicinal Products ("CPMP")
seeking approval to market CEA-Scan in Europe. In December 1994, the
Company received notification from the Department of Health Medicines
Control Agency ("MCA") in the United Kingdom that the Company's
manufacturing operations are in general compliance with the guidelines of
Good Manufacturing Principles ("cGMP"). Meanwhile, the Company continues
to work diligently with the U.S. and foreign regulatory authorities and
remains fully committed to the eventual approval of CEA-Scan in the U.S.,
Europe and Canada. However, no assurance can be given at this time as to if
or when any such approvals could be forthcoming.
Overview (Continued)
The Company has not achieved profitable operations and does not anticipate
achieving profitable operations during fiscal year 1996. The Company will
continue to experience operating losses until such time as the Company is able
to generate sufficient revenues from sales of its proposed in vivo products.
Further, the Company's working capital will continue to decrease until such
time as the Company is able to generate positive cash flow from operations or
until such time, if at all, as the Company receives an additional infusion of
cash from the sale of the Company's securities, from other financings, or from
corporate alliances to finance the Company's operating expenses and capital
expenditures.
Results of Operations
Revenues for the six-month period ended December 31, 1995 were $931,000
as compared to $1,693,000 for the same period in 1994, representing a
decrease of $762,000, which was due to a decrease in research and
development revenue. On August 2, 1995, the Company announced that its
Development and License Agreement with Pharmacia had been terminated
and that it had regained the North American marketing rights to CEA-Scan.
Accordingly, research and development revenues for the six months ended
December 31, 1995 were significantly lower than the $1,144,000 recorded for
the same period in 1994, of which $1,000,000 was received from Pharmacia.
In vitro product sales and royalties for the six-month period ended December
31, 1995 were $99,000, as compared to $70,000 for the same period in 1994.
Interest income of $742,000 for the six-month period ended December 31,
1995 increased by $262,000 as compared to the same period in 1994. This
was due to an increase in cash, cash equivalents, and marketable securities
resulting from the completion of financing transactions (see "Liquidity
and Capital Resources").
Revenues for the three-month period ended December 31, 1995 were
$487,000 as compared to $829,000 for the same period in 1994, representing a
decrease of $342,000. The decrease in revenues was principally due to a
decrease in research and development revenue, as discussed above. Interest
income of $417,000 for the three-month period ended December 31, 1995
increased by $165,000, as compared to the same period in 1994. This was due
to an increase in cash, cash equivalents, and marketable securities resulting
from the completion of financing transactions (see "Liquidity and Capital
Resources").
Total operating expenses for the six-month period ended December 31, 1995
were $7,408,000 as compared to $7,309,000 for the same period in 1994.
The increase in total expenses of $99,000 was principally related to an
increase in general and administrative costs of $106,000, which was
attributable to higher consulting expenses.
Results of Operations (Continued)
Total operating expenses for the three-month period ended December 31,
1995 were $3,656,000 as compared to $3,498,000 for the same period in
1994, representing an increase of $158,000. Research and development
costs for the three-month period ended December 31, 1995 increased by
$95,000 as compared to the same period in 1994, resulting from an increase
in the number of patients enrolled in clinical trials. General and
administrative costs for the three-month period ended December 31, 1995
increased by $60,000 as compared to the same period in 1994, as explained in
the preceding paragraph.
Net loss for the six-month period ended December 31, 1995 was $6,477,000,
or $0.20 per share, as compared to a loss of $5,616,000, or $0.19 per share,
for the same period in 1994, representing an increased loss of $861,000.
Net loss for the three-month period ended December 31, 1995 was $3,169,000,
or $0.10 per share, as compared to a loss of $2,669,000, or $0.09 per share,
for the same period in 1994, representing an increased loss of $500,000. The
increases in net losses in 1995 as compared to 1994 principally result from
lower research and development revenues, partially offset by higher interest
income, as discussed above. In addition, the net losses per share for the
three- and six-month periods ended December 31, 1995 were positively
impacted by the higher weighted average number of common shares
outstanding for those periods, as compared to the same periods in 1994. The
increase in the weighted average number of common shares outstanding was
principally due to the conversion of Preferred Stock into the Company's
Common Stock (see "Liquidity and Capital Resources").
Liquidity and Capital Resources
At December 31, 1995, the Company had working capital of $22,504,000,
representing an increase of $3,597,000 from June 30, 1995, and had no
long-term debt other than certain lease obligations (see Note 7 to Unaudited
Condensed Consolidated Financial Statements). The net increase in working
capital resulted principally from an equity financing of $10,000,000 which
occurred in September 1995, pursuant to which a group of investors
purchased 200,000 shares of non-dividend paying Series C Convertible
Preferred Stock for $10,000,000. The terms of this transaction allow the
investors, at their discretion, to convert the Preferred Stock into shares
of the Company's Common Stock during a pre-determined period subject to
extension. The conversion price is based on pre-determined discounts of up
to 9 3/4% from the average market price per common share over a 30-day
trading period surrounding the dates conversion notices are received.
On February 1, 1994, the Company entered into a master lease agreement,
which was subsequently amended, pursuant to which the Company may lease
equipment for research, development and manufacturing purposes having an
aggregate acquisition cost of up to $2,200,000. The basic lease payments
under the master lease agreement will be determined based on current market
rates of interest at the inception of each equipment schedule take-down, and
payable in monthly installments over a four-year period. The lease
agreement contains an early purchase option, at an amount which is deemed to
be fair value, exercisable no later than ninety days before the thirty-sixth
installment is due. Under the
Liquidity and Capital Resources (Continued)
lease agreement, continued compliance with certain financial ratios is
required and, in the event of default, the Company will be required to provide
an irrevocable letter of credit which is generally equal to the outstanding
balance of lease payments due at the time of default. As of January 31, 1996,
the Company has leased equipment with a cost basis aggregating $1,630,000
under the master lease agreement (see Note 7 to Unaudited Condensed
Consolidated Financial Statements).
The Company's liquid asset position, measured by its cash, cash equivalents
and marketable securities, was $26,470,000 at December 31, 1995,
representing an increase of $3,656,000 from June 30, 1995. This increase was
principally attributable to the September 1995 financing transaction discussed
above. Although the Company's liquid asset position at December 31, 1995
improved from June 30, 1995, it is anticipated that working capital and cash,
cash equivalents and marketable securities will decrease during the remainder
of fiscal year 1996 as a result of planned operating and capital expenditures.
At present, the Company believes that its financial resources will be
sufficient to fund anticipated operating expenses and capital expenditures
through calendar year 1997. The Company intends to supplement its financial
resources from time to time as market conditions permit through additional
financing and through collaborative marketing and distribution agreements.
In addition, the Company continues to evaluate various programs to raise
additional capital and to seek additional revenues from the licensing of its
proprietary technology. At the present time, the Company is unable to
determine whether any of these future activities will be successful and, if so,
the terms and timing of any definitive agreements. There can be no assurance
that the Company will be able to obtain additional funds in the future.
PART II - Other Information:
Item 1. Legal Proceedings
In January 1996, the United States Court of Appeals for the
Third Circuit affirmed the District Court's April 1995
dismissal of the shareholder lawsuit that was originally filed
June 2, 1994. The complaint alleged that public disclosures
from January 30, 1992 through May 25, 1994 about the future
prospects of the Company were fraudulent and misleading.
The District Court held, among other things, that the claims
made by the Plaintiff were "simply an insufficient basis on
which to bring a securities fraud action."
Items 2-5 Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) None
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K, dated
October 2, 1995, with respect to Item 5 - Other Events.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
IMMUNOMEDICS, INC.
(Registrant)
DATE: November 13, 1995 /s/ David M. Goldenberg
David M. Goldenberg,
Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
DATE: November 13, 1995 /s/ Amy Factor
Amy Factor,
Executive Vice President
(Principal Accounting Officer)